Homebuilders Optimistic for First Time Since January

Jobs market improvements help.

Justin Loiseau
Justin Loiseau
Jul 16, 2014 at 12:42PM

Homebuilder confidence is more positive than not for the first time since January, according to July's National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index report released today. 

After clocking in at 49 points for June, July's index managed to jump four points to reach 53. Analysts had expected an uptick, but their estimate of a 51 reading proved too pessimistic for July's recovery. 

With July's index clocking in above 50, this indicates that more builders view sales conditions as good than poor. The survey looks at builder confidence in the market for newly built single-family homes. 

"This is ... an important sign that [builder confidence] is strengthening as pent-up demand brings more buyers into the marketplace," said NAHB Chairman Kevin Kelly in a statement today.

Digging deeper into components, gains were widespread. Current sales conditions increased four points to 57, prospective buyer traffic edged back up three points to 39, and future sales expectations for the next six months added on a solid six points to reach 64.

NAHB Chief Economist David Crowe added further context to July's growth, noting that labor market improvements go hand-in-hand with housing demand. He was quoted as saying, "An improving job market goes hand in hand with a rise in builder confidence. As employment increases and those with jobs feel more secure about their own economic situation, they are more likely to feel comfortable about buying a home."